Hawaii hotels hurt Hilton net

The hotel company says reduced sales here lowered profit in the first quarter

Staff and wire reports

LOS ANGELES » Hilton Hotels Corp. said yesterday that "unexpected weakness" in Hawaii played a role in its reduced first-quarter profit, but that the hotel chain remains optimistic about its prospects here.

Net income declined 8.7 percent to $95 million, or 23 cents a share, from $104 million, or 26 cents, a year earlier, Beverly Hills, California-based Hilton said yesterday in a statement.

Renovations at hotels including the Hilton New York as well as higher insurance expenses slowed growth in North America. Hilton had benefited last year after hurricane victims in New Orleans seeking housing rented rooms in other southern U.S. cities.

But the company also said reduced group sales in San Francisco and Hawaii hurt results.

Robert LaForgia, executive vice president & chief financial officer, declined to break out Hawaii results in a conference call with analysts yesterday.

But he said that quarterly growth in revenue per available room (RevPAR) at Hilton's company-owned hotels -- about 6 percent -- would have been much higher if not for Hawaii and San Francisco.

"If you just take those two markets out of our mix, which are pretty substantial markets -- particularly in Hawaii -- RevPAR would've been up about 11.5 percent," LaForgia said. "So they had a significant impact on the overall reported results."

The company reduced its annual forecast for revenue per room, sending shares down yesterday.

Ian Carter, chief executive of Hilton International, said that all of the chain's Hawaii properties were affected by the downturn in Japanese tourism.

"We really just saw some unexpected weakness in Hawaii, and that's a very big market for us, and that did pull down our occupancy numbers just a little bit," Carter said.

In addition, the Waikoloa resort is undergoing renovations to expand its DolphinQuest attraction and its tram system, he said.

"But we're optimistic, particularly Waikoloa should do better and the full year for Hawaii still looks pretty good," Carter said.

Matthew Hart, president and chief operating officer, said the company has throttled back its outlook for Hawaii slightly. "You're going to have a great year, but it's just a little bit softer than we thought three months ago," Hart said.